A Mastercard logo is seen on a credit card. File Photo: VCG

US credit card giant Mastercard Inc has gotten off to the races in China, with its online clearinghouse joint venture in Beijing gaining regulatory approval on Tuesday as the world's second-largest economy continues with its financial opening push.

In a statement posted on its website, the People's Bank of China (PBC), the country's central bank, announced that it, together with the country's banking and insurance regulatory commission, has approved an application by Mastercard NUCC Information Technology (Beijing) Co to operate as a bankcard clearing house in China.

Plans to set up the joint venture (JV) between Mastercard and Chinese online payment clearing house NetsUnion Clearing Corp (NUCC) were announced last year. Mastercard owns 51 percent of the JV. 

The opening of the bankcard market is a vital component of the country's financial deregulation and it is positive to push for domestic payment and clearing services to be more open and internationalized, read the PBC statement, hailing the approval as another "concrete indication" of the nation's efforts to open up its financial sector and deepen supply-side reforms of the financial market.

The JV is required to finish preparatory work within one year and file with the central bank in a manner prescribed by law to begin operations, according to the central bank. 

Mastercard has received PBC approval to "begin formal preparations to set up a domestic bankcard clearing institution in China," the US company said in a statement sent to the Global Times on Tuesday.

"We are delighted and encouraged by this latest decision from the PBC," Ajay Banga, president and CEO of Mastercard, said in the statement, noting that China is a vital market for the company which has reiterated its commitment to creating a safer, more inclusive and seamless payments ecosystem for Chinese consumers and businesses.  

Tuesday's announcement came after the PBC's approval in late 2018 of a JV between American Express Co, one of Mastercard's rivals, and Chinese fintech firm Zhejiang Lianlian Group to set up a bankcard network.

Introducing foreign clearinghouses is a milestone in China's financial sector opening-up, showcasing the country's firm determination to open up its huge market for overseas players, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times.

In recent years, China's financial market opening-up mainly focused on making it convenient for foreign capital inflows, lifting entry requirements and quota limitations.

"The approval of the setup of the clearinghouse JV shows that China is ac-celerating comprehensive opening-up amid complex internal and external situations," he said, noting that the outbreak of novel coronavirus pneumonia will not decelerate China's opening-up pace.

Along with the continuous opening-up, China should carry out procedural reforms while strengthening cross-border cooperation and supervision to prevent risks, Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times.

Bringing international experience and competitiveness, foreign market players' entry into the Chinese market also creates challenges due to different laws and supervisory environments than they're accustomed to, Dong said.